**Exhibit10.38**

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**TODHUNTER INTERNATIONAL,INC.**

**222 Lakeview Avenue, Suite1500**

**West Palm Beach, FL 33401**

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**ENDORSEMENT SPLIT-DOLLARAGREEMENT**

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**THISENDORSEMENT SPLIT-DOLLAR AGREEMENT** (this “Agreement”) is entered into this **20th day of February 2004**,by and between Todhunter International, Inc., a Delaware corporation (the“Corporation”) and **Jay S. Maltby** (the “Executive”).

 

**WITNESSETH:**

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**WHEREAS**, the Executive is employed by theCorporation; and

 

**WHEREAS**, the Corporation recognizes the valuableservices performed by the Executive and wishes to encourage his continuedemployment; and

 

**WHEREAS**, the Corporation is desirous of providingprotection for the beneficiaries of Executive in the event of his untimelydeath; and

 

**WHEREAS**, The Corporation has applied for, and isthe owner of Life Insurance Policy Number 10034387 (the “Policy”) in thespecified face amount of **$1,500,000** from the Lincoln NationalLife Insurance Company (the “Insurer”); and

 

**WHEREAS**, it is understood and agreed that thisAgreement is to be considered effective as of the date on which the Policy wasissued by the Insurer or the date of execution of this Agreement whichever islater.

 

**NOWTHEREFORE**, inconsideration of the premises and of the mutual promises herein contained, theparties hereto agree as follows:

 

**1.             Ownership Rights In The Policy**.

 

A.            The Corporation shall have all of the ownership rights,options and privileges permitted by the Policy except those expressly grantedto the Executive by the terms of this Agreement.

 

B.            The Corporation has the right to borrow or to pledge thecash surrender value of the Policy to the extent of its interest specified inParagraph 1.C., and as permitted by the terms of the Policy. The Corporation’sinterest in the cash surrender value of the Policy at any time during theExecutive’s lifetime, or at death, shall be adjusted to reflect anyindebtedness on or secured by the Policy which is attributable to borrowing byor on behalf of the Corporation (including any interest due on suchindebtedness).

 

C.            The Corporation shall have the right to designate itselfas beneficiary of the Policy, to the extent of the difference between the totaldeath benefit paid under the life insurance contract and the amount designatedin Paragraph 1.D., below, provided such amount is reduced by any indebtedness(on or secured by the Policy) which is attributable to borrowing by or onbehalf of the Corporation (including any interest due on such indebtedness)and/or any withdrawals by or on behalf of the Corporation.

 

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D.            The Corporation hereby endorses to the Executive policydeath benefits in the amount of **$1,500,000** which shall be payable tothe Executive’s estate if the Executive dies while this Agreement is inforce.  The Corporation and theExecutive’s estate may select a settlement option as provided in the Policy atthe time of distribution.

 

E.             The Corporation may not take any action with respect tothe Policy that will impair any right or interest of the Executive in thePolicy.

 

**2.             Premium Payments**.  On or before the due date of each Policy premium, orwithin the grace period provided therein, the Corporation shall pay the fullamount to the Insurer.

 

**3.             Division of Death Proceeds of Policy**.  In the event that the Executive shall diewhile this Agreement is in force, the Corporation shall be entitled to receivefrom the Policy proceeds an amount equal to the Corporation’s interest in thePolicy, as determined under Paragraph 1.C. of this Agreement. The portion ofthe Policy proceeds which is in excess of the amount paid to the Corporationshall be paid to the Executive’s estate in accordance with the terms of thePolicy and Paragraph 1.D. of this Agreement.

 

**4.             Waiver of Premium**.  Upon the unanimous agreement of theCorporation and the Executive, the Corporation shall apply to the Insurer for asupplemental agreement providing for the waiver of policy premiums in the eventof the Executive’s disability. The Corporation shall pay any additional premiumattributable to such an agreement.

 

**5.             Choice of Dividend Options**.  To the extent the Insurer declares dividendson the Policy, the Corporation shall have the right to choose the option orcombination of options it desires from among those offered by the Insurer. TheCorporation shall notify the Insurer of its choice.

 

**6.             Termination of Agreement**.

 

A.            This Agreement shall be cancelled and shall terminateupon the termination of the Executive’s employment with the Corporation for anyreason other than the Executive’s disability as defined in Paragraph 3 of theSalary Continuation Plan Agreement between the Corporation and the Executivedated **February20, 2004** (the “Salary Continuation Plan Agreement”).   Upon such termination, the Executive shallhave a 60-day option to pay the Corporation an amount equal to theCorporation’s interest in the Policy under Paragraph 1.C. in return for theCorporation’s release of any claim to the policy. If, within the 60-day periodfollowing the cancellation of this Agreement, the Executive fails to exercisesaid option, then the Executive shall be deemed to have relinquished all rightsin the Policy and the Corporation will be free to surrender or take any otheraction with respect to the Policy as it may desire. If the Executive fails topay the Corporation within the 60-day option period, the Executive agrees uponrequest of the Corporation to execute any and all instruments that may berequired to transfer all right, title, and interest in the Policy to theCorporation.

 

B.            Notwithstanding Paragraph 6.A., in the event theExecutive dies during his employment with the Corporation, this Agreement shallbe cancelled and shall terminate upon the payment of the death proceeds of thePolicy to the Executive’s estate in accordance with Paragraph 1.D. andParagraph 3 of this Agreement.

 

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**7.             Termination of this Agreement in Connectionwith a Change in Control**.

 

A.            Notwithstanding anything in this Agreement to thecontrary, unless the Executive is terminated “for cause,” as defined inParagraph 10.C. of this Agreement, the Corporation may not terminate thisAgreement without the consent of the Executive during the period beginning nine(9) months before a Change in Control (as defined below); provided however,this Agreement shall be cancelled and shall terminate once the Executive becomeentitled to receive payment of the retirement benefit in accordance withParagraph 1 of the Salary Continuation Plan Agreement.

 

B.            For the purpose of this Agreement, a “Change of Control”shall mean any of the following events:

 

(i)            The acquisition by anyperson, entity or “group” required to file a Schedule 13D or Schedule 14D-1promulgated under the Securities Exchange Act of 1934, as amended (the“Exchange Act”) (excluding, for this purpose, any of the following that acquiresbeneficial ownership of voting securities of the Corporation, including sharesacquired pursuant to the exercise of options or warrants, or conversion ofpreferred stock outstanding as of the date hereof: (a) CL Financial, Ltd.,Angostura Ltd., or any of their affiliates; (b) the Corporation, its affiliatesor subsidiaries; (c) V&S Vin & Spirit AB, its affiliates orsubsidiaries, solely in connection with a transaction with the Corporation, itsaffiliates or subsidiaries approved by the Board of Directors; or (d) anyemployee benefit plan of the Corporation, or its affiliates or subsidiaries),of beneficial ownership (within the meaning of Rule 13d-3 promulgated under theExchange Act) of over 40% (in one or more transactions, in the aggregate) of eitherthe then outstanding shares of common stock or the combined voting power of theCorporation’s then outstanding voting securities entitled to vote generally inthe election of directors; or

 

(ii)           An election orappointment to the Board of Directors by virtue of which the individuals whoimmediately prior thereto constituted the Board of Directors (the “IncumbentBoard”) no longer constitute at least a majority of the Board of Directors(other than an election or appointment of a director or directors precipitatedby CL Financial, Ltd., Angostura Ltd., V&S Vin & Spirit AB, or any oftheir affiliates, or by the Board of Directors if at that time at least amajority are individuals who are directors on the date hereof), provided thatany person who becomes a director subsequent to the date hereof whose election,or nomination for election by the Corporation’s stockholders, was approved by avote of at least a majority of the Incumbent Board (other than an election ornomination of an individual whose initial assumption of office is in connectionwith an actual or threatened election contest relating to the election of theDirectors of Employer, as such terms are used in Rule 14a-1 promulgated underthe Exchange Act) shall be, for purposes of this Agreement, considered asthough such person were a member of the Incumbent Board; or

 

(iii)          Approval by the stockholders of theCorporation of: (a) a reorganization, merger or consolidation by reason ofwhich persons who were the stockholders of the Corporation immediately prior tosuch reorganization, merger or consolidation do not, immediately thereafter,own more than fifty percent (50%) of the combined voting power entitled to votegenerally in the election of directors of the reorganized, merged orconsolidated company’s then outstanding voting securities; or (b) a liquidationor dissolution of the Corporation or the sale of all or substantially all ofthe assets of the Corporation, whether such assets are held directly orindirectly (excluding the currently proposed joint ventures with affiliates ofCL Financial, Ltd. and/or V&S Vin & Spirit AB, if such transactionsconstitute a sale of substantially all of the assets of Employer).

 

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C.            The definition of “for cause” termination shall be thesame as set forth in theemployment agreement between the Executive and the Corporation in effect as ofthe date of this Agreement.  In theevent there is no employment agreement between the Executive and theCorporation on the date of this Agreement, “cause” for termination shall mean that (a) the Executive is convicted of a felony which, in the soledetermination of the Board of Directors, would have a material adverse effecton the Executive’s ability to perform his duties hereunder or on the businessor reputation of the Corporation; (b) the Executive has exhibited grossmisconduct resulting in material harm to the Corporation, its business orreputation; (c) the Executive has willfully misappropriated the Corporation’sassets or has otherwise willfully defrauded the Corporation, including withoutlimitation by fraud, theft, embezzlement, or breach of a fiduciary dutyinvolving personal profit.  For purposes of thisparagraph, no act or failure to act on the Executive’s part shall be considered“willful” unless done, or omitted to be done, by him not in good faith andwithout reasonable belief that his action or omission was in the best interestsof the Corporation.

 

**8.             Amendment**.  This Agreement may be amended at any timeand from time to time, by a written instrument signed by the Corporation andthe Executive.

 

**9.             Binding Effect**.  All of the terms and provisions of thisAgreement shall be binding upon, inure to the benefit of, and be enforceable bythe parties and their respective administrators, personal representatives,legal representatives, heirs, successors and permitted assigns, whether soexpressed or not.

 

**10.          Notices**.  Any notice, consent or demand required orpermitted to be given under the provisions of this Agreement shall be inwriting, and shall be signed by the party giving or making the same.  If such notice, consent or demand is mailedto a party hereto, it shall be sent by United States certified mail, postageprepaid, addressed to such party’s last known address as shown on the recordsof the Corporation. The date of such mailing shall be deemed the date ofnotice, consent or demand.

 

**11.          Insurer Not a Party to Agreement**.  The Insurer shall not be deemed a party tothis Agreement. Payment or other performance of its contractual obligations inaccordance with the Policy provisions shall fully discharge the Insurer fromany and all liability.

 

**12.          Named Fiduciary**.  The Corporation is hereby designated the“Named Fiduciary” as such term is defined in the Employee Retirement IncomeSecurity Act of 1974, as amended (“ERISA”). As Named Fiduciary, the Corporation shall be responsible for themanagement and administration of the terms of this Agreement. The Corporation’sBoard of Directors may delegate to others the management and operatingresponsibilities of the plan including the employment of advisors and mayexercise any other powers necessary for the discharge of its duties to theextent not in conflict with the provisions of ERISA.

 

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**13.          Claim Procedure**.

 

A.            If the Executive or his personal representative believesthat he is being denied a benefit to which he is entitled under this Agreement(hereinafter referred to as a “Claimant”), such Claimant may file a written requestfor such benefit with the Corporation setting forth his claim.  The request must be addressed to thePresident of the Corporation at its then principal place of business.

 

B.            The Corporation shall reply to the Claimant’s claimwithin ninety (90) days of receiving the claim.  If the claim is denied in whole or in part, the Corporation shalladopt a written opinion, using language calculated to be understood by theClaimant, setting forth:

 

(i)            The specific reason or reasons for such denial;

 

(ii)           The specific reference to pertinent provisions of thisAgreement on which such denial is based;

 

(iii)          A description of any additionalmaterial or information necessary for the Claimant to perfect his claim and anexplanation why such material or such information is necessary;

 

(iv)          Appropriate information as to the steps to be taken if theClaimant wishes to submit the claim for review; and

 

(v)           The time limits for requesting a review under subsectionC. and for review under subsection D. hereof.

 

C.            Within sixty (60) days after the receipt by the Claimantof the written opinion described above, the Claimant may request in writingthat the Secretary of the Corporation review the determination of theCorporation. Such request must be addressed to the Secretary of theCorporation, at its then principal place of business. The Claimant or his dulyauthorized representative may, but need not, review the pertinent documents andsubmit issues and comments in writing for consideration by the Corporation. Ifthe Claimant does not request a review of the Corporation’s determination bythe Secretary of the Corporation within such sixty (60) day period, he shall bebarred and estopped from challenging the Corporation’s determination.

 

D.            Within sixty (60) days after the Secretary’s receipt of arequest for review, he will review the Corporation’s determination. Afterconsidering all materials presented by the Claimant, the Secretary will rendera written opinion, written in a manner calculated to be understood by the Claimant,setting forth the specific reasons for the decision and containing specificreferences to the pertinent provisions of this Agreement on which the decisionis based. If special circumstances require that the sixty (60) day time periodbe extended, the Secretary will so notify the Claimant and will render thedecision as soon as possible, but no later than one hundred twenty (120) daysafter receipt of the request for review.

 

**14.          Governing Law**.  This Agreement and all transactionscontemplated by this Agreement shall be governed by, and construed and enforcedin accordance with, the internal laws of the State of Florida without regard toprinciples of conflicts of laws.

 

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**15.          Jurisdiction and Venue**.  The parties acknowledge that a substantialportion of the negotiations, anticipated performance and execution of thisAgreement occurred or shall occur in Palm Beach County, Florida.  Any civil action or legal proceeding arisingout of or relating to this Agreement shall be brought in the courts of recordof the State of Florida in Palm Beach County or the United States DistrictCourt, Southern District of Florida. Each party consents to the jurisdiction of such Florida court in anysuch civil action or legal proceeding and waives any objection to the laying ofvenue of any such civil action or legal proceeding in such Florida court.  Service of any court paper may be effectedon such party by mail, as provided in this Agreement, or in such other manneras may be provided under applicable laws, rules of procedure or local rules.

 

**IN WITNESSWHEREOF**, the partieshereto have set their hands on the day and year first hereinabove written.

 
| **TODHUNTER  INTERNATIONAL, INC.** |              |
|------------------------------------|-------------------|
|                               |              |
| By:                                | /s/ Ezra Shashoua | , Executive Vice President & CFO |
|                               |              |
| **EXECUTIVE**                      |
|                               |
| By:                                | /s/ Jay S. Maltby | , Chairman and CEO |
|                                    |                   |  |  |  |

 

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